Ally Bank–which is in the throes of shedding its bankrupt mortgage division–is vowing to carry on in the residential finance sector, albeit in a reduced role.
But the Treasury Department-owned bank–in a new filing with the Securities and Exchange Commission--said it will use correspondents and “wholesale brokers” to fund jumbo mortgages for its own portfolio.
Ally earned $354 million from its mortgage business in the third quarter, more than triple of what it earned in 2Q, according to the filing. The results exclude the operations of Residential Capital Corp., whose chief assets (its servicing portfolio) are in the process of being sold to Ocwen Financial Corp., and its partner Walter Investment Management Corp., Tampa, Fla.
ResCap filed for bankruptcy protection earlier in the year.
The bank said a final hearing on the ResCap sale will be held Nov. 19 in bankruptcy court in lower Manhattan. “Additionally, Ally continues to fully cooperate with the court-ordered examination which continues to move forward. Ally remains prepared and confident that the remaining aspects of the Chapter 11 cases will be resolved to Ally's satisfaction. As with any legal process, timing and the outcome can never be guaranteed.”
Additionally, Ally is contemplating selling $123 billion of mortgage servicing rights that are not part of ResCap. (ResCap is the subservicer on the loans.)
Meanwhile, all of Ally Financial earned $384 million in 3Q compared to a $898 million loss in 2Q. In the third quarter of 2011 Ally lost $210 million.
The U.S. Treasury owns roughly 74% of Ally, which is positioning itself to be a specialist in auto-related lending.